Industry experts discuss wood pellet heat cost savings

William Strauss, president and CEO of FutureMetrics, demonstrated the operation of a fuel calculator to the crowd at the Northeast Biomass Heating Expo in Saratoga Springs, N.Y., March 21-23. His team developed the tool to illustrate the cost savings that come along with installing and using a wood pellet boiler.

Strauss used the calculator to explain that with a long-term, low-interest loan, a wood pellet boiler can be close to free. And that’s what MES wants for its customers. “We have a great argument that [installing a wood pellet boiler] will cut your heating costs in half,” he said. “But the hurdle is the initial capital costs.”

Laura Richardson, coordinator for the New Hampshire Office of Energy and Planning, detailed a program that helped homeowners deal with those initial capital costs. The rebate program provides 30 percent of the system and labor costs associated with purchasing and installing a new boiler for the end user, and assisted with 67 boiler installations in one year. “”We are stuck in New Hampshire with fuel costs,” she said. “We see the possibility for the bulk pellet industry to take off in New Hampshire. It is a perfect storm.”

That perfect storm Richardson referred to, was evident in her data that showed the fuel price disparity in February, when the price per million Btu of wood pellets in the state was roughly $15 and the price for the same volume of heating oil was nearly $30. The success of the rebate program has already helped Richardson see firsthand the growth of the wood pellet industry in her state. “We are excited about the leverage we are getting out of this,” she said. “The consumers are inspiring the industry to put up their own capital to expand in the region.” And her department continues to field inquiries from entrepreneurs interested in the pellet delivery and pellet manufacturing business, she said.

“Many people ask, ‘Won’t pellets get more expensive as time goes by?’” Strauss said. They won’t, he assured the audience. As the price of heating oil goes up, he said, the gap in price between it and wood pellets will only get bigger. That is, in part, because diesel fuel costs go hand in hand with heating oil costs, Strauss said.

Although both Richardson and Strauss were able to show examples of how a wood pellet boiler can be installed economically, Strauss did point out that if the perfect storm Richardson was alluding to grows even more, the wood pellet industry in the U.S. could take a step back. “By 2014, winter supply and demand will be different,” he said. “Demand will outpace supply and that will be bad for industry.”

His teams at MES and FutureMetrics already believe wood pellet boiler use is hitting or has potentially hit critical mass, as many people have a wood pellet boiler, or know someone who does.